The business and culture of our digital lives, from the L.A. Times

Foursquare fueled the popularity of location services, one of the hottest categories on the Web. Now Facebook has emerged as a competitor with its new feature Places. Where does that leave the New York start-up?

Even as it closes in on 3 million users, Foursquare is dwarfed by the world’s most popular social networking site, which has more than 500 million. But Dennis Crowley, Foursquare's chief executive, said he’s not worried: His company’s service has a very different appeal.

Foursquare attracts users by getting them to compete for rewards and bragging rights. For example, Foursquare users compete to become “mayor” of a physical location by “checking in” there the most times in a 60-day period. Facebook is betting its users will get value not from broadcasting their locations to the world but from sharing their locations with friends.

Foursquare was in talks this summer to be bought by Facebook but instead took a gamble and a $20-million investment from venture capital firms including Andreessen Horowitz, which valued the company at $115 million.

We talked to Crowley about his take on the situation:

Q: Facebook Places has been in the works for months and you’ve been talking to Facebook about it for a few weeks. Now that it has have rolled out, what do you think of it?

A: It’s pretty much exactly what we thought it was going to be: A pretty simple check-in system that allows you to share your location with friends and do the standard sharing on Facebook. There were no real big surprises.

Q: You were the pioneer in this space. Does Facebook's getting into location-based services validate the market?

A: That’s the thing. Everyone keeps saying, “Oh my God, you guys must be so stressed with Facebook getting into this.” Not really. We spend a lot of our time telling people why location is important and why people want to check in. Facebook now gets to do that for us. We can focus on the stuff we want to do.

Q: Do you think Facebook will make location sharing mainstream?

A: I think so. I think this is going to lead to more users for us. It’s going to increase the number of people interested in the location space.

Q: People have been casting Facebook Places as a major threat, if not a death knell, for Foursquare and other location-based services. Is it?

A: Look what happened when Facebook got into Twitter’s space. People said Twitter was gone. But it just made Twitter stronger and more focused. Our services are totally different. They do different things, serve different needs and different people.

Q: In what ways would you say Foursquare is different from Facebook?

A: Even though we are well-known for our check-ins, that is just the atomic unit. Everything we do hinges off check-ins. Our game mechanics drive people to be more adventurous. Our vision is to make the world a more interesting place to explore.

Q: You are in the middle of a redesign and you are building new features. Can you talk about those?

A: Our redesigned app is going to focus on drawing some attention to going out and accomplishing other people’s tips, and creating to-do lists and sharing those with other people. We are trying to bridge the things you read about online and want to experience offline and the actual experience offline.

Q: When will the redesign be done?

A: We are almost done with the app, probably a couple more days, then we send it off to Apple. And we are slowly rolling out stuff on our website.

Q: What about your relationship with advertisers now that Facebook is in the location services business?

A: We’ve been doing Foursquare specials since early last summer. The platform has gotten a lot more robust. We have some game mechanics. We have started doing group specials. We have some dashboard analytics for businesses, such as who are their best customers. Local businesses love this stuff. It’s giving them insights and becoming a very powerful tool. We hope to focus on more of that.

Q: Your growth has been very fast for such a young company. When will you hit 3 million users?

A: We are a little bit shy of 3 million users, we’re at about 2.8 million now. We are growing at about 180,000 users every 10 days.

Q: When will you start letting users push Foursquare check-ins into the Facebook Places check-ins?

A: We currently let users push check-ins into the news feed. We are playing with the Facebook Places feed internally. We’re not sure when we will turn that on.

Q: You were in talks to be bought by Facebook but took a $20-million venture capital investment instead. Why?

A: There is so much we want to do as a company. It didn’t feel like the right time to let go of it. A buddy of mine who has done this before said, “If you can’t see where the ride stops, don’t get off it.” I don’t know when this ride stops.